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Allegations of “misleading” advertising regarding interest-free payment methods have been levelled against the personal lender.
The Australian Securities & Investments Commission (ASIC) has confirmed it is suing Latitude Finance Australia (Latitude) and Harvey Norman Holdings Ltd (Harvey Norman) over the promotion of interest-free payment methods.
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The case focuses on adverts that ran between January 2020 and August 2021 that promoted “no deposit” and “interest-free” payment methods over a specified term for purchases at Harvey Norman.
ASIC alleges that the adverts were “misleading” because they did not disclose that consumers could only use the interest-free payment methods if they applied for and used a Latitude GO MasterCard.
The regulator has also alleged that the true cost of using the payment method was “misrepresented” because the adverts failed to adequately disclose establishment fees and monthly account service fees.
ASIC has suggested that consumers who signed up to the GO MasterCard between 16 March 2021 and 10 August 2021 and made a purchase at Harvey Norman using the 60-month interest-free payment method were liable to pay at least $537 in fees, even if they paid off their purchase over 60 months.
It also suggested that both Latitude and Harvey Norman had “earned significant revenues” from the GO MasterCard.
The regulator is now seeking declarations, pecuniary penalties, injunctions and other orders against Latitude and Harvey Norman.
Speaking of the legal action, ASIC deputy chair Sarah Court said: “ASIC is concerned the advertising did not provide consumers with the full picture, that they could only use the interest free payment method by applying for and using certain Latitude credit cards.
“These credit cards, ASIC alleges, attracted substantial fees over the course of the 60 month payment term, and exposed consumers to the risks of incurring further debts and charges, as well as potentially affecting their credit rating.
“Consumers have a right to make informed choices. Credit providers and retail partners such as Latitude and Harvey Norman should ensure that their advertising clearly discloses all important information about payment methods and any fees.”
Latitude has acknowledged the filing of civil proceedings by ASIC, with a spokesperson saying the lender “takes these allegations very seriously” and has worked “cooperatively” with ASIC during its investigation.
“Latitude is now reviewing ASIC’s claim and will not be commenting further at this stage given the matter is before the courts,” the spokesperson said.
The date for the first case management hearing is yet to be scheduled by the court.
The ASIC case is the latest legal action the personal lender has faced.
Last month, Latitude was hit with a $1.55 million infringement notice by the media and communications regulator, the Australian Communications and Media Authority (ACMA), after consumers complained that they had been sent text and email messages between June 2021 and March 2022 without the ability to unsubscribe — and without consent after recipients had made attempts to unsubscribe.
The messages also involved the promotion of the GO MasterCard, among other products.
The non-bank was revealed to have mischaracterised commercial emails and texts as “information only” messages, according to ACMA’s findings.
As such, Latitude was issued with a pecuniary penalty of $1,549,560, which has now been paid.
The listed lender has been going through a period of change recently, after announcing it will sell its insurance business, Hallmark, and revealing that its managing director and chief executive Ahmed Fahour AO will be stepping down from his role by the end of August 2023.
It had also been in talks to acquire the buy now, pay later (BNPL), instalment and credit card operations of hummgroup (Humm) earlier this year, but the two parties “mutually agreed” to terminate the arrangement given the “current major disruption in the financial market”.
[Related: Latitude appoints new non-executive board director]
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